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FDA USER FEE LEGISLATION SET FOR SENATE LABOR & HUMAN RESOURCES HEARING ON SEPT. 22; Rx-TO-OTC SWITCH APPLICATION FEES ADDED TO BILL DURING HOUSE MARKUP

Executive Summary

Sen. Kennedy's (D-Mass.) Labor & Human Resources Committee has scheduled a Sept. 22 hearing on FDA user fee legislation. The committee will hear testimony from Pharmaceutical Manufacturers Association President Gerald Mossinghoff and from a representative of the Industrial Biotechnology Association, among others. Committee markup is likely to be scheduled for soon after the hearing. The proposed user fee bill has begun moving quickly through the House. Rep. Dingell's (D-Mich.) Energy & Commerce Committee adopted the bill (HR 5952) on Sept. 17. A floor vote is scheduled for Sept. 23 under suspension of the rules. The proposal previously was adopted by Rep. Waxman's (D-Calif.) Energy and Commerce/Health Subcommittee on Sept. 15; the bill was introduced by Dingell and Waxman on Sept. 16. An amendment adopted by the House Energy & Commerce Committee Sept. 17 adds Rx-to-OTC switch applications to those subject to user fees. The bill still excludes OTC manufacturers from establishment and product registration fees. "This amendment is not a substitute for user fees for OTC drugs," Waxman commented. "It will raise only about $300,000 per year. But it is a start." Waxman added that "the OTC drug industry has requested committee report language urging FDA to study the issue of proposing user fees for OTC drugs." Under Waxman's amendment, NDA supplements for Rx-to-OTC switch applications will be subject to the same fee as other NDA supplements, i.e., $50,000 per application in fiscal 1993 increasing to $116,000 per application in FY 1997. Support for the user fee program by the Nonprescription Drug Manufacturers Association earned that group plaudits from FDA officials. FDA Deputy Commissioner Michael Taylor told an NDMA group on Sept. 16 that he "applaud[s] this organization for getting involved in the discussions that are going on. I think that was a very wise decision and one that holds promise for a long-term benefit to this industry." A second amendment from Waxman allows FDA to spend user fee revenues to pay "employees under contract with FDA who work in facilities owned or leased for FDA." The amendment was added to prevent the expenditure of user fees on outside reviews of NDAs and supplements. At an Aug. 10 hearing, Waxman told FDA Commissioner Kessler that any effort to apply user fees to outside reviews could "undermine the entire effort to adopt user fee legislation this year" ("The Pink Sheet" Aug. 17, p. 6). Vice President Quayle's Council on Competitiveness called for external reviews as one of its proposals for reforming the drug approval process ("The Pink Sheet" Nov. 18, 1991, p. 3), and FDA already has initiated a pilot external review program. The amendment ensures that funding will have to come from Treasury appropriations and not from user fees. The bill otherwise remains essentially the same as a draft circulated during the week of Sept. 7 ("The Pink Sheet" Sept. 14, p. 3). Application, product and establishment fees will be added to FDA appropriations to achieve the goals laid out by Commissioner Kessler in a Sept. 14 letter to Dingell. As part of its "performance goals," FDA is pledging to eliminate its current backlog of overdue applications within two years of enactment of user fee legislation. Kessler's Sept. 14 letter is referenced in the bill's "Findings" section. If FDA has the supplemental funds mandated by proposed prescription drug user fee legislation, Kessler said that the agency will "review and act on all NDAs on [the Center for Drug Evaluation & Research's] Oct. 1, 1992 overdue list within 24 months." The agency will also "eliminate overdue...PLAs, ELAs and amendments to PLAs within 24 months of user fee payments," Kessler pledged. FDA will "eliminate overdue...efficacy and manufacturing supplements to NDAs within 18 months," Kessler said. The most recent CDER figures, from the end of July, show a backlog of 33 overdue NDAs, 57 overdue efficacy supplements and 721 overdue manufacturing supplements. The agency recently has been making progress in reducing the NDA backlog ("The Pink Sheet" Aug. 17, p. 12). "The performance goals" specified in Kessler's Sept. 14 letter "represent a realistic projection of what FDA can accomplish, with industry cooperation and the additional resources" provided by the bill, the commissioner declared. At the Aug. 10 hearing before the Health Subcommittee, Kessler testified that user fees could help FDA reduce its average review time from 20 months to 12 months for standard applications and from 12 months to six months for priority applications. Those estimates are included in Kessler's letter as "five-year goals (to be implemented by Sept. 30, 1997)." In addition to the interim backlog goals, Kessler's letter outlines interim application goals. For fiscal year 1994, FDA will review 55% of NDAs, PLA/ELAs and efficacy supplements within 12 months, and the agency will review 55% of manufacturing supplements and resubmitted applications within six months. For FY 1995, the goal increases to 70% and then to 80%, 90% and 100% in subsequent years. FDA will provide annual reports on its progress starting Nov. 30, 1994, Kessler said. Other interim goals for the agency include recruitment of 50% of the new review staff paid for via the fees by FY 1995. During the Sept. 15 markup, Waxman noted that the anticipated $327 mil. in fees over five years will pay for "600 new employees for the review of prescription drug applications." FDA will "establish an industry/FDA working group upon initiation of the user fee program to develop and oversee joint programs to improve review times," Kessler's letter continues. The agency will "implement project management methodology for all NDA reviews within 12 months of initiation of user fee payments and for all PLA/ELA reviews within 18 months," the letter adds. FDA will also "implement performance tracking and monthly monitoring of [Center for Biologics Evaluation & Research] performance within six months of initial user fee payments (CDER already has such a program)." Finally, FDA will adopt uniform computer-assisted NDA standards during FY 1995 and initiate a pilot computer-assisted PLA program during FY 1993. The Office of Management & Budget "has advised us that there are no objections to the presentation of these views from the standpoint of the Administration's program," Kessler concluded. Several potential hurdles remain: how "paper NDAs" will be handled is an issue on the House side; the Senate will have to deal with small company exemptions and a possible rider on vitamin regulation. At the Sept. 17 markup, Waxman noted that "there is one outstanding issue yet to be resolved" with the legislation: the bill's language on NDAs submitted under 505 (b)(2), so-called paper NDAs. Because some generic applications are filed as paper NDAs, FDA wants to work out language that excludes generics but includes other NDAs and supplements. The generic industry wants to ensure that, if generic firms do have to pay fees for paper NDAs, they remain exempt from establishment and product registration fees. On the Senate side, the Association of Biotechnology Companies plans to push for amendments to exempt small companies submitting their first application from paying any fees for one year. ABC also wants to add language explicitly giving the agency the authority to waive fees for "true" orphan drugs. The House version of the bill gives FDA the authority to waive fees when they would "present a significant barrier to innovation because of limited resources." Another hurdle in the Senate could come from Labor & Human Resources Ranking Republican Hatch (Utah). He is expected to develop an amendment to the bill that would bar FDA regulation of dietary supplements until Congress can hold comprehensive hearings next year.
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